This blog is for informative purposes for Taylor & Martin customers.
Common buildings insurance, sometimes called block insurance, is a type of insurance that covers flats or buildings, including the common areas that are co-owned by all of the property owners in a building. It’s important that all areas of a building are insured to the reinstatement value, i.e. to the value it would cost to reconstruct the building.
Is common buildings insurance different from buildings insurance?
Yes. Buildings insurance covers the cost of rebuilding your home if it was damaged or destroyed whereas common buildings insurance applies to shared areas in apartment blocks or tenements. Both may be required to adequately insure the building in which you own your property.
Why is common buildings insurance important?
If a serious incident, like a fire or gas explosion, damaged or totally destroyed the tenement the homeowner would need to pay to rebuild their property and contribute to the shared reconstruction costs even if it wasn’t their fault.
It’s impossible to rebuild just your own flat as part of a block, so if one homeowner is uninsured or underinsured it creates problems for everyone. The estimated average cost of a tenement fire is nearly £400,000, which is likely to cause serious financial and legal problems without the right insurance.
Who needs common buildings insurance?
Under the Tenements Act (Scotland) all flat owners have a legal responsibility to take out common buildings insurance. The title deed to a property will specify whether individuals must personally ensure their share of common areas or whether a joint insurance policy with the other owners in the building is required.
If there are common areas in a building that aren’t covered by any of the owners’ individual insurance policies then a joint policy may be required. Even if the title deed doesn’t specify common buildings insurance is required, it may still be worth considering to protect your property.
Do tenants need buildings insurance?
Tenants do not require any form of building insurance, however, tenants may choose to insure their belongings with contents insurance. The landlord of the property has the responsibility to ensure the building, including the common areas.
What about the other property owners?
All the owners in a building must ensure their flats and the common areas otherwise the building will not be adequately protected. Because of this, all owners have the legal right to ask other owners to show them evidence of their insurance policy and that they have kept up with payments. This request must be done in writing and the evidence should be shown within 14 days. If they refuse to provide evidence, or you discover that they are uninsured or underinsured you should talk to a solicitor. For more information, Under One Roof offers impartial advice to flat owners in Scotland on their rights and responsibilities.
How should flat owners divide the cost of common buildings insurance?
If your title deeds require a common insurance policy, or you and the other owners have decided to opt for a common policy, then it may or may not be stipulated how these costs should be divided. If the title deeds don’t specify, then the flat owners might choose to divide the costs equally or based on the size of the flats.
How do I know if I’m insured to the right amount?
An RICS accredited property surveyor can calculate the reinstatement cost of your building. Having an accurate appraisal of the reinstatement cost of your building will help get the right amount of coverage to stop you and the other owners from overpaying for the policy or underinsuring the building.
How can I find the right insurance for our building?
Taking out a common buildings insurance policy with a group of flat owners isn’t always straightforward, so we recommend enlisting the help of a specialist insurance broker. Here at Taylor & Martin, we work with leading independent brokers to help property owners and developers get the right insurance for their building.
Get in touch to find out more.